A South Korean billionaire and technology leader was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao prior to his arrest, which the company described as “unfortunate.”
At 58, Kim is facing allegations of manipulating shares of SM Entertainment during a takeover attempt last year to thwart a bid from another major K-pop agency, Hybe. Both SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, with SM representing groups like Aespa and Hybe representing BTS.
Kakao successfully acquired SM Entertainment, but Bae Jae-hyun, Kakao’s chief investment officer, was indicted last year on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao, in which Kim holds around a 24% stake, had over 10,000 employees in 2020. At one time, Kim was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
In the wake of the arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it would be essential for those remaining at the company to demonstrate effective leadership in the absence of its founder.